15) On July 1, 2012, Homer, Inc. loaned a customer $10,000 on a 3-month, 9% note. Part A: Show the effect on the accounting equation of the July 31, 2012 adjusting entry for interest. Include both...

15) On July 1, 2012, Homer, Inc. loaned a customer $10,000 on a 3-month, 9% note.

Part A:
Show the effect on the accounting equation of the July 31, 2012 adjusting entry for interest. Include both account titles and amounts.

Shareholders' equity

Part B:
Put an X to indicate each financial statement that is affected by the adjusting entry to accrue interest.

______Income Statement______ Statement of Changes in Shareholders' Equity

______Statement of Cash Flows______ Balance Sheet

Part C:
Would your answer in Part A be different if the note were a $10,000,
6-MONTH, 9% note, instead of a 3-month note?

16) Answer the following questions using the information obtained from one of X, Inc.’s financial statements:

Amounts are in millionsDecember 31,

2012 2011

Cash and equivalents$2,808$1,815

Receivables:

Notes and accounts receivable (less allowance for bad debts

of $127 and $175)2,8732,909

Insurance for asbestos- and silica-related liabilities1,06696

a.On which financial statement is the above information found?

b.What is meant by cash equivalents?

c.Where could you look in the annual report to find more information about cash equivalents?

d.Does X, Inc. have significant credit sales? How can you tell?

e.Where could you look in the annual report to find more information about the receivables from insurance companies?

f.Did the receivables from insurance companies result from sales to insurance companies?